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From the It’s-about-time-one-of-you-lunkheads-finally-said-it department.

Thursday, 26 June, 2008

Autoblog is the prototypical suburban car guy blog. They have a child site called Autoblog Green which discusses issues of alternative fuels and other items of interest to the socially conscious motorist. Yesterday afternoon ABG posted a press release which mentioned the specter of five-dollar-per-gallon gasoline before the end of the summer driving season. Here, in its entirety is a reply to that post:

If we think it will cost that much it will.

Fucking investors manipulated the market will push this as far as they can.

Commodity trading was ment to protect Farmers, Miners, oil companies from price spikes or massive drops.

Lets say Farmer bill has X amount of Crop Z. The commodity trader will guarantee he will get 5 bucks per ton of that product when it comes to harvest time.

So lets say the price crashes and the farmer would make less money then he spent growing the crop.

The commodity trader is hoping that crop Z will sell for 5 or more dollars a ton when it comes to harvest time. anything more is pure profit for doing nothing.

So the farmer may lose out on some profit, but he makes money he is happy with when it comes to harvest time he futures trader sells the crop for him

The same thing happens with oil but its for oil thats delivered 5 weeks from now not months.

They are keeping pushing more and more oil because they have so much money invested into it if it collapses its going to fuck them out of billions of dollars. The smallest delivery of oil contracts offered are 100,000 Barrels.

Now with oil when it comes to delivery time the traders pretty much tell the oil producing countries to go to hell they dont want the oil.

This creates a totally false demand.
Hense supply and demand is bs and can be manipulated.

Lets say some dumb new toy comes out on christmas season, They make 10 million of them, and the store claims 13 million want to be bought by people so they double the price of the toy.

Now you come to find out 5 million of those people never actually had any intention of buying the toy
If the store did that they would go to prison.
If a CEO did that with his Stock he would go to prison.

For commodity traders they just get a High five and a big fat paycheck.

Now that explains why countries dont want to produce anymore oil because they cant sell any more.

Would you be willing to produce more oil if you cant sell it?

Sadly many people in the goverment and media will refuse to truly cover this even our goverment is pushing supply and demand. Why?
Thats what happens when you dump hundreds of millions of dollars into lobbiest groups

The same people who do this are the ones who did the .com bubble, and the real estate market.
All they care about is a quick buck at the expense of millions peoples lively hoods.
Thats the problem with this country people didnt care about the next quarter as they did 5,10,15,20 years down the road.

Long term growth is about 2-7% annual growth. These people want to see something double in 3 months or they dump it.

Hell when i was born my grand parents bought me 500 shares in well sadly an oil company. That cost them under 10 grand. After 2 splits its now worth
around 150 grand.

Oil should be at 180 a barrel…..
in 25 years. NOT today.

The same people who create the panic that oil is going to hit 100 NO NO WAIT 120 NO NO NO 150 NO NO NO 300 a barrel in a year!!!. Are the same investment houses who push oil future contracts.
Again if this was a stock these companies would be shut down.

Sigh this isnt capitalism its corporate welfare speaking of that Cabellas and walmart are not in business of selling this for a profit but at collecting subsides.
a couple years ago cabellas sold 200 million worth of product and collected 300 million in welfare.

In short, the model for this behavior is not the manipulation of electricity in California in 2000 and 2001 for which Enron took the fall. The model for “Enron” was the irrational demand for anything “high-tech” in the 1990’s: The Internet Bubble. I don’t know who this guy is, and I cannot confirm anything he posits, but this is the first analysis from any source which makes a plausible conclusion with more information than any other analysis I have yet seen.

Even if you don’t buy into this interpretation of events, this question remains; what is the market-based solution to the supposed not-yet crisis? It isn’t drilling since the market isn’t buying any more and leases all over the world are under performing. Part of the answer is refining capacity, but that is similarly covered by a political smokescreen.

q.v. The EPA specifically prevents/sets onerous standards to build a new refinery. Production cannot increase at existing facilities; seasonally-retired facilities can not go into production. Some refineries allegedly are running at full capacity, therefore no additional capacity is available.

The answer is moving away from petroleum. That is, not modifying the market or watching the market, but abandoning the market. Ask the people who run radio stations, television stations or run cinemas about people abandoning the market. Ask the VC guys about how anyone would buy anything “high-tech” in the 90’s and paper was created just to take the money …

This is what happened in the housing bubble as well. Do you really think a 750 sq. ft. matchstick house is worth five-times per capita annual household income? Of course, I don’t yet know how to abandon the housing market.

Why do we have to wait for all this to pass into history before looking at it opaquely?

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